We have seen small movements following yesterday’s strong reaction to the elections in Greece and France. We expect that today will be a day of consolidation and volatility will fall. The financial market is playing the waiting game in respect of Greece. The largest party of the country has given up forming a government; now it is up to the second largest party. If it does not succeed, the third largest party will be in turn and then the president. If none of the parties succeed, new elections will be called. If a new election is called, we assess that this will result in a somewhat calmer development in the financial market.
Today industrial production data will be released in Germany and Norway. Our macro-economist expect a small increase for German industry.
Rumour has it that Spain will offer the country’s third largest bank a capital injection of EUR 7-10bn. This is a large amount and will keep the financial market on its toes.
EURUSD (SELL): We recommend investors to SELL EURUSD; S/L at 133.15. S/L has been placed above the trend channel in which EURUSD has traded since the spring of 2011. For the very short term, the cross rate will see several technical points of support, particularly the triple bottom that defines the head-and-shoulder formation that may result in significant selling of EURUSD if we see a daily close below 129.74. Yesterday EURUSD traded down to 129.55 but closed at 130.51. There is resistance at 131.25; if trade goes above that, it is very likely that we will again see the level at 132.20-40.
NZDUSD (SELL): The publication of poor trade balance figures from Australia overnight put both AUS and NZD under pressure. We have an initial target in the range of 77.80 – 88.40. The next important point of support is the trend line from 2009 at 77.30.
EURSEK (NEUTRAL): We recommend a BUY ORDER at 884 for EURSEK. The pressure is still to the top side. Yesterday EURSEK traded above the two recent tops and has now paved the way for a movement up to 895. Over the next week or so, dividend payments will be made by several large Swedish companies (e.g. Ericssson and H&M); our spot has estimated that the payments amount to about EUR 1.5bn, which will put upward pressure on the price. Yesterday Svensson of the Riksbank stated that a stronger SEK will be problematic for exporters. A trading suggestion for aggressive investors: Buy at 888, with stop below 885.35.
NOKSEK (BUY): The relative game between NOK and SEK continues to the benefit of NOK. Svenssons statements yesterday and the dividend payments weaken SEK.